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Political ties and raising capital in global markets: Evidence from Yankee bonds

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  • Ambrocio, Gene
  • Gu, Xian
  • Hasan, Iftekhar

Abstract

This paper examines whether state-to-state political ties help firms obtain better terms when raising funds in global capital markets. Focusing on the Yankee bonds market, we find that issuances by firms from countries with close political ties with the US feature lower yield spreads, higher issuance amounts, and longer maturities. Such an association is more pronounced for firms located in low income and highly indebted countries as well as firms in government-related industries, first-time issuers, and relatively smaller firms. Our study provides evidence supporting the notion that country-level political relationship is an important factor when raising capital in international markets.

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  • Ambrocio, Gene & Gu, Xian & Hasan, Iftekhar, 2022. "Political ties and raising capital in global markets: Evidence from Yankee bonds," Journal of Corporate Finance, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:corfin:v:74:y:2022:i:c:s0929119922000669
    DOI: 10.1016/j.jcorpfin.2022.102223
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    1. repec:zbw:bofrdp:2019_013 is not listed on IDEAS
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    3. Ambrocio, Gene & Gu, Xian & Hasan, Iftekhar & Politsidis, Panagiotis N., 2022. "The diplomacy discount in global syndicated loans," Journal of International Money and Finance, Elsevier, vol. 120(C).

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    More about this item

    Keywords

    Bond spreads; Political ties; Yankee bonds;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General

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